Retailer tops list for tech spending

Exec: ‘Borderless enterprise’ is aim

Neil Ashe, President and CEO, Global eCommerce for Wal-Mart Stores, Inc, speaks during a press conference at the Embassy Suites Northwest Arkansas in Rogers on Thursday June 5, 2014.
Neil Ashe, President and CEO, Global eCommerce for Wal-Mart Stores, Inc, speaks during a press conference at the Embassy Suites Northwest Arkansas in Rogers on Thursday June 5, 2014.

Correction: Wal-Mart Global e-Commerce has acquired 14 companies since 2012. This article included outdated numbers from June 2014 and excluded the most recent acquisitions.

Wal-Mart Stores Inc. has made no secret of its desire to build a technology company inside the world's largest retailer.

Chief Information Officer Karenann Terrell has described the mission as "the goal of a lifetime for us." Neil Ashe, global e-commerce chief executive officer, also has been vocal about becoming known as a technology leader.

Evidence suggests that Wal-Mart is doing more than talking about it.

No company in the world has committed more financial resources to information technology-related expenses than Wal-Mart, according to a report from the International Data Corp. Using a model that takes into account telecommunication services, hardware, software, internal and IT services spending, Wal-Mart devoted an estimated $10.2 billion for tech spending in 2014.

Since 2010 the company has been ranked as one of the Top 10 spenders among 2,600 companies studied for the report. Not only is Wal-Mart the only retailer in the Top 10, it is the only one represented in the Top 25. CVS, which operates 7,800 retail pharmacies and more than 900 walk-in clinics, ranks No. 26, according to International Data Corp. project manager Jessica Goepfert.

"They're spending a lot," Goepfert said. "To be clear, the research we do, these are estimates. Wal-Mart doesn't come in and tell us exactly what they're spending. Part of it is a function of size, but I think it's clear Wal-Mart is putting its money where its mouth is. We expect them to continue to do so."

Wal-Mart did not comment specifically on the report, but spokesman Randy Hargrove said the company has placed a priority on building out its technology capabilities. Those investments include spending dedicated to e-commerce and Wal-Mart technology.

"We're undergoing a transformation in our business as we integrate the digital and physical shopping experience for our customers," Hargrove said. "Technology is an extremely important part of how we're powering this transformation."

For calendar years 2012-14, Wal-Mart spent an estimated $29.1 billion for information technology efforts, according to the report. That eclipses the combined spending from the next two companies in the rankings, Bank of America Corp. and Citigroup Inc. Wal-Mart is also estimated to have outspent Exxon and telecommunications companies like AT&T Inc. and Verizon Communications Inc.

As the world's largest retailer Wal-Mart employs more than 2 million globally. With 1.3 million employees in the U.S., Wal-Mart is the country's largest private employer.

Wal-Mart has 4,500 stores in the U.S. and operates nearly 11,000 stores in 11 countries worldwide. Sales last year were more than $480 billion, including $288 billion in its home country.

Because of its size and stated mission to become more of a player in e-commerce, it makes sense that Wal-Mart ranks so highly on the list, Edward Jones retail analyst Brian Yarbrough said. Wal-Mart has publicly stated it is investing up to $1.5 billion on expenses related to e-commerce initiatives this year, including expansion of a network that includes 134 distribution facilities and 11 fulfillment centers.

"Just think of the number of stores worldwide and the crazy amount of revenue they generate on a daily basis," Yarbrough said. "Combine all of that with this changing retail landscape to be more omnichannel and it seems to make sense to me."

Wal-Mart, according to the report, has placed priority on spending to improve customer experience and data storage.

CEO and President Doug McMillon provided insight into the retailer's vast collection of data during the 2014 shareholder's meeting. Wal-Mart had 30 petabytes of shopping information at that time and for perspective, McMillon noted one petabyte of digital music could play continuously for 2,000 years.

"For years our data has helped us run stores around the world," McMillon said. "Now it's allowing us to serve customers in more ways than imaginable."

Ashe, also during last year's shareholder event, said 1,000 employees had joined Wal-Mart's Silicon Valley operations since 2013. From 2012-14 Wal-Mart hired an estimated 2,500 engineers, programmers and data scientists and acquired 12 technology companies.

Terrell is on the agenda for InformationWeek Conference April 27-28 in Las Vegas. According to promotional materials Terrell will discuss how Wal-Mart "has moved from a technology group that focused on operational support into one that helps the entire business experiment and innovate. That shift has meant changing the way the company prioritizes, manages, and allocates people to IT projects. And it has changed the way Walmart uses and rotates IT talent. Terrell's goal is for IT to help Walmart become a 'borderless enterprise.' "

Wal-Mart, although it is the only retailer on the list and might be spending more than others, has shared goals with the telecommunications and banking companies that are also ranked. International Data Corp. launched the study, which it calls the Worldwide IT Wallet, in 2006 and spending to improve customer experience is a common mission, Goepfert said.

"It sounds so generic, and it means something different from a retailer to a telecommunications firm to a bank, but any technology that helps better understand and serve customers are important investments, Goepfert said. "We're seeing it in Wal-Mart's investment in mobility and big data."

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